Vaccine Optimism Ignited Downward Pressure for the Dollar

Vaccine Optimism Ignited Downward Pressure for the Dollar

The US Dollar continues to follow the downward trail after receiving successive blows from the unfolding developments in the past trading days.

The greenback’s setback is attributed mainly to the positive developments in the Covid-19 vaccine. 

Recently, Great Britain is the first Western country to approve and order the Pfizer-BioNTech developed inoculation.

Consequently, the stimulus bill in the US ignited downward pressure for safe-haven assets. Spectators are expecting a more generous amount with a Democrat on the frontline.

All of these events turned out to the disadvantage of the world’s reserve currency with no significant event to counteract. 

The USD index, which tracks the performance of the United States’ currency against other entities in the basket, shed off 0.2% to 90.925. 

It fell and settled on the support level just above the 90-point threshold. This is its lowest settlement in nearly 2 ½ years.

Due to this, the euro did not fail to capitalize on its counterpart’s weakness. The EUR/USD pair edged up by 0.1% to 1.2124, which is its highest since April 2018.

The common currency remains undaunted despite the looming quantitative easing from the European Central Bank anticipated next week. 

The euro continues to benefit from the positive development of the Brexit negotiations. 

In the latest update, sources familiar with the matter noted that the two parties have now relaxed more on their hardline stance and an agreement is expected in the coming days.

On the other hand, France threatened to veto the post-separation deal should it deem that some of the conditions are putting its position at much disadvantage.

Should this pushes through, such could ignite a painful reversal for the euro.

Updates on Asia and the Pacific’s FOREX Charts

Meanwhile, the pound is also performing its best in the last three months. The GBP/USD pair currently trades at $1.3385 after clinching a 0.2% increase.

The country targets starting vaccination as early as next week after announcing the approval earlier.

Elsewhere, the USD/JPY pair fell by 0.1% to 104.38. This came as Japan reported a lukewarm Service Sector PMI earlier in the day.

The country’s indicator still sits below the 50-point threshold which indicates that more businesses are still trudging their survival in a pandemic-stricken economy.

Across the Pacific, the Aussie climbed to its highest in the last two years after securing a 0.2% boost.

In the latest foreign exchange charts, the AUD trades at 0.7428 against the USD, indicating a sustained risk-on sentiment among FOREX investors.

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